JPMorgan's Biggest Concern Is That Bitcoin Will Succeed

After digesting all the hyperbole and the pessimism, my biggest concern is not that Bitcoin will fail, but that it or one of its many virtual currency competitors will one day succeed.

In the extreme, Bitcoin may lead to economic activity moving from the regulated economy to the underground “shadow” economy (after all, one of its primary selling points lay in its inability to be traced), even if some Bitcoin recipients faithfully declare it as income.

If this were to happen, the tax burden would fall disproportionately on the regulated economy that remains, creating a lot of unwelcome distortions.

Perhaps this is why there is a clear inverse relationship between the size of a country’s shadow economy and its wealth per capita. In other words, no one likes paying taxes, but when no one actually does pay them, everyone suffers.